Texas General Lines — Life, Accident, Health and HMOGeneral InsuranceEasy
A new insurance agent is learning about the different ways insurance companies are organized. An insurer that is formed under the laws of a state other than the one in which it is operating is known as a(n):
- AAlien insurer
- BForeign insurer
- CAuthorized insurer
- DDomestic insurer
Show answer & explanationAnswer & explanation
Correct answer: B. Foreign insurer
A foreign insurer is an insurance company that is incorporated or domiciled in a state other than the one where it is currently conducting business. For example, an insurer incorporated in New York but operating in Texas would be a foreign insurer in Texas.
Why the other options are wrong
- A. An alien insurer operates in a country different from its country of incorporation.
- C. An authorized (or admitted) insurer has a certificate of authority to transact business in a state, regardless of its domicile.
- D. A domestic insurer operates in the state where it was incorporated.
Foreign Insurer
An insurance company that is organized and domiciled in a state other than the state in which it is currently operating.
- Operates out-of-state from its incorporation.
- Must be authorized to do business in the operating state.
- Distinct from domestic (in-state) and alien (out-of-country) insurers.
Memory trick: Foreign: From afar, but still in the USA.